Kingdom of Lesotho Public Expenditure Review : Improving Expenditure Efficiency for Inclusive Development and Growth
This Public Expenditure Review (PER) was prepared in response to a request from the Ministry of Finance (MoF) and is designed to inform Lesotho’s fiscal consolidation due to a narrowing of its fiscal space. Lesotho is facing a tough macro-fiscal ou...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/739221532956650763/Kingdom-of-Lesotho-Public-expenditure-review-improving-expenditure-efficiency-for-inclusive-development-and-growth http://hdl.handle.net/10986/30222 |
| Summary: | This Public Expenditure Review (PER) was
prepared in response to a request from the Ministry of
Finance (MoF) and is designed to inform Lesotho’s fiscal
consolidation due to a narrowing of its fiscal space.
Lesotho is facing a tough macro-fiscal outlook due to a
sharp decline in Southern African Customs Union (SACU)
revenues. This situation necessitates a significant
adjustment in the current fiscal stance to ensure
longer-term fiscal sustainability. However, the adjustment
should be tailored to minimize any adverse growth and
poverty impacts. Thus, this PER is intended to support the
government’s efforts to adjust its policies to better
address Lesotho’s current macro-fiscal circumstances.
Lesotho is one of the poorest and most unequal countries in
the world, despite a relatively good growth performance over
the past 15 years. Lesotho’s per capita gross national
income is about 1550 US dollars. Lesotho’s poverty rate is
59 percent (1.90 US dollars purchasing power parity [PPP]
per day), its Gini coefficient is 0.541, and about 59
percent of the population now lives below the international
poverty line of 1.90 dollar/day. Both poverty and extreme
poverty disproportionately affect the rural population, and
the bottom 40 percent of Lesotho’s population experienced a
decline in consumption each year between 2002 and 2011. This
compares to increases, albeit meager, for the remaining 60
percent of the population over the same period. Lesotho’s
gross domestic product (GDP) grew at an annual average rate
of 4 percent between 2000 and 2016, whereas its GDP per
capita grew at an average rate of 2.8 percent during the
same period. Despite the high level of government spending,
Lesotho faces challenges in addressing inclusive growth and
providing access to quality services for the poor, while
also operating in a highly fragile environment. After
political turmoil, the new government with a fragile
coalition of 7 parties was established in June 2017. The
government is facing a significant challenge to improving
access to and the quality of public services. It is also
seeking to invigorate the domestic private sector to
diversify the growth sources of its economy. The level of
unemployment is very high, with a low employment-to
working-age population ratio, which limits prospects for
social mobility and poverty reduction. |
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